Tether, the issuer of USDT that is currently stored on the Solana blockchain, has just announced a $1 billion chain swap to move those funds to the Ethereum blockchain.
Since the collapse of crypto exchange FTX, Solana, which was recently ranked among the top five largest cryptocurrencies by market cap, has been experiencing difficulties, prompting the announcement. With a 25.4% decline over the past week, Solana has fallen from its previous market capitalization ranking of 14th to 16th. It has dropped from its all-time high of $256 to its current value of $13.33. This is a decrease of 95%.
Performing a chain swap entails transferring cryptocurrency from one blockchain to another. In the past, Tether has taken this action whenever demand for its stablecoins shifted from one blockchain to another. For example, in the middle of 2020, Tether exchanged $1 billion in USDT from Tron to Ethereum twice in less than two months.
In a matter of minutes, Tether will coordinate with a third party to execute a chain swap, converting 1 Billion USDt from Solana to Ethereum ERC20. During this process, the total supply of #tether will remain unchanged.
In the smart contract blockchain space, Solana (SOL) competes with Ethereum, much like Tron and others. Every major cryptocurrency, including Bitcoin and Ethereum, has seen sell-offs in the wake of the FTX fiasco, but Solana has taken a disproportionate hit.
One of the largest exchanges, FTX, has strong ties to Solana. FTX has invested heavily in several Solana-related cryptocurrency projects and played a key role in the creation of Serum, Solana’s primary decentralized exchange and DeFi liquidity provider.
After an alleged hack of the FTX exchange on November 12, withdrawals were disabled, effectively taking Serum offline. When the private keys for the Solana DeFi project were also stored in FTX, hackers were able to disable access to Serum, so the developers of Solana DeFi had to shut it down.
The Solana Foundation, a nonprofit organization that promotes the development of the Solana blockchain, disclosed holding $1 million in FTX cash or equivalent assets.
Tether (USDT) and the major stablecoin USD Coin (USDC), both of which run on the Solana blockchain, were temporarily removed from Binance, the world’s largest digital asset exchange, yesterday. Crypto.com said last week that it would stop accepting USDC and USDT on the Solana platform.
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